Local commercial banks have disrupted EcoCash and other mobile money service providers by arm twisting the Reserve Bank of Zimbabwe (RBZ) to announce measures that compel telephone companies to conduct banking services through them.
EcoCash, a mobile money service launched in late 2011 by the country’s largest mobile phone company, Econet, has grown to be such a force that it already has more than 1.7 million users. It moves hundreds of thousands of dollars through its accredited agents daily and analysts say EcoCash has the potential to become the economy’s biggest “bank”.
With banks feeling that the service, which has a far wider reach than them, is snatching away customers, bankers pushed new measures through the central bank to direct mobile money operations. As a result, RBZ Governor Gideon Gono announced on Thursday that all mobile money transfers should now be backed by funds held in banks.
Gono said some of the bankers had threatened not to sign a Memorandum of Understanding on reducing bank charges which was under negotiation for more than two months, unless he announced the new measures on mobile money.
“As the monetary authority, we advise that mobile money transfer services are merely a payment system or delivery channel which does not amount to deposit taking,” he said when presenting the central bank’s first half monetary policy statement here Thursday.
“Accordingly, mobile money transfers should operate on a credit push principle where all e-money is backed by pre-funded balances which are held in banking institutions,” he added.
He called on banks to leverage on the development to distribute financial products and called for infrastructure sharing between banks and other payment service providers, including mobile network operators, to accommodate banks on their platforms.
“Relationships between financial institutions and payment system providers should be complementary rather than acrimonious,” he said.
With the bulk of the majority of Zimbabwe’s population living in the unbanked rural areas, EcoCash has become the major money transfer platform as people can move cash to their relatives across the country within minutes and as a result of its aggressiveness, Econet has extended EcoCash to payment of public transport fares, retail purchases, school fees and other utility payments.
The mobile phone company announced on Wednesday that it was in the process of developing a product which allows small traders to buy and sell shares on the Zimbabwe Stock Exchange.
This comes at a time when the banking sector is struggling to regain the confidence of the public following years of economic downturn characterised by hyper-inflation which saw deposits getting stuck in financial institutions while some banks were put under receivership.